Reply to: Client requests me to go permie

[ChimpMaster]

There’s your reason to go permie.

close the limited company, MVL the money so you extract it at 10% then salary sacrifice a significant amount of you salary into your pension pot.

Exactly what I did, and it's good to an extent, but the afterlife is downer. For me anyway.

[eek]

Yes that's a bitter pill to swallow although OTOH just emphasises how fortunate we are (well for now, this time next year IR35 could be automatic for everyone for all we know!)

My personal tax is very low because I keep my Ltd company income to the higher rate threshold, and can afford to live off that, so it would be a huge difference. But especially the last couple of years that's raised it's own issues as company money is starting to build up. Huge back-dated pension contributions is one thing I looked at; ad should I go perm then I've got to look into all that side of things with the company too (I know there are lots of threads on winding up I need to go read)

There’s your reason to go permie.

close the limited company, MVL the money so you extract it at 10% then salary sacrifice a significant amount of you salary into your pension pot.

[d000hg]

supposed to make a good life for themselves (with a family) on salaries even as good as £100k : tax + NI deductions are almost £35k from a £100k salary

Yes that's a bitter pill to swallow although OTOH just emphasises how fortunate we are (well for now, this time next year IR35 could be automatic for everyone for all we know!)

My personal tax is very low because I keep my Ltd company income to the higher rate threshold, and can afford to live off that, so it would be a huge difference. But especially the last couple of years that's raised it's own issues as company money is starting to build up. Huge back-dated pension contributions is one thing I looked at; ad should I go perm then I've got to look into all that side of things with the company too (I know there are lots of threads on winding up I need to go read)

[d000hg]

You don't see why because you have a raft of information you know that we don't making your specific situation less risky. You explain some of it later and starts to make sense. Nothing in your first post indicated it was anything more than a change of payment method whilst work doesn't change really so do think that it's prudent to start with worst case scenario. When someone says contract to perm it's pretty common for it to be exactly the same on different type of contract.

If you are PM working on a few projects, the client asks you to join their PM team and carry on what you are doing then it's pretty clear you were filling a perm role all along. We could have probably pulled an outside determination apart whilst in the gig and agreeing to go perm doing the same seals it.

Yours is clearly different, you know your beans so if you think your original determination is safe then Im sure it is.

Thanks - I wasn't looking for an IR35 discussion initially or I would have said.
I was only concerned because posts read very definitively it was a big problem generally which was somewhat alarming.

[ChimpMaster]

I do possess "a specific set of skills" ( ) which are particularly valuable to this client based on work I've done in the past on very, very niche technology. There's the argument that means I can command a higher salary but equally, the long-term plan is phase that stuff out so one might argue that's a great position for a contractor to charge a high rate and then leave when it's done.

Sounds so very similar to the position I was in a few years ago, when I left contracting to go permie. My very niche tech was dead everywhere in the UK except at this one client where it was part of critical system operations, so they paid a very handsome rate for my skills. I rode the contract to the shore... the work eventually dried up and the product was removed from the company. I went permie at one of their subsidiaries, in a different team and different role.

Permie pay is good but nothing like the strong rate I was on. And the tax is hugely demotivating! It's hard to see how anyone is supposed to make a good life for themselves (with a family) on salaries even as good as £100k : tax + NI deductions are almost £35k from a £100k salary

I consider myself fortunate to have had a good contracting career that allowed us to level up in life. It would have much harder, almost impossible, on PAYE. I don't have the luxury of regretting going permie, because I didn't really have any other contracting option - but I do hate it. The money is bad (relatively), the work is boring me to anxiety, the expectations are too much etc etc.

I would happily take a lower paid job if I could work in more interesting fields like AI or cloud, or product implementation.

So just throwing out my experience if it helps.

[dsc]

[...]
When it comes down to it, the money question shouldn't be "what is the equivalent annual salary to £x per day?"
but more "what will my monthly take-home be, what extras are there (holidays, pension, health, etc), is that enough for me to maintain a comfortable lifestyle, what positives and negatives will it mean to me"[...]

Anyone who simply calculates salary based on their day rate is deluded imho, it's comparing apples to oranges, consultants are charging more as they are supposed to be there for a short period and bring a ton of topic specific knowledge. Perm always pays less due to perm benefits and the fact that you have job security (typically).

[malvolio]

d000hg old chap, I wonder if you've read this piece...

[northernladuk]

I don't see why accepting a role with the same company would implicate my current contract as inside IR35. My current contract is to do work on one specific project and they have already said that the role would differ from that quite substantially because they don't want/allow me as a contractor to be a critical part of things, knowing I can just leave tomorrow if I want. There are also differences in terms of working practices (I use my own equipment currently, WFH rules, etc).

You don't see why because you have a raft of information you know that we don't making your specific situation less risky. You explain some of it later and starts to make sense. Nothing in your first post indicated it was anything more than a change of payment method whilst work doesn't change really so do think that it's prudent to start with worst case scenario. When someone says contract to perm it's pretty common for it to be exactly the same on different type of contract.

If you are PM working on a few projects, the client asks you to join their PM team and carry on what you are doing then it's pretty clear you were filling a perm role all along. We could have probably pulled an outside determination apart whilst in the gig and agreeing to go perm doing the same seals it.

Yours is clearly different, you know your beans so if you think your original determination is safe then Im sure it is.

[WTFH]

I'm currently minded to push back "happy as it is" or "make me an offer". Although I don't know I agree 100% on "they should make the first offer" rather than taking control and being blunt "I want X".

I'd start with "make me an offer" or "what sort of money were you thinking?". It shows that you might be interested, and means they have to think about it (and do a bit of research).
If they come in very low, then it's easy for you to say that you'd prefer to stay the way it is, the decision is made for you.
If they come in close to what you would accept, then tell them you'd consider it, but would want to know more about the full package.
They probably will have wiggle room in what they offer, but maybe only 10% or so.

When it comes down to it, the money question shouldn't be "what is the equivalent annual salary to £x per day?"
but more "what will my monthly take-home be, what extras are there (holidays, pension, health, etc), is that enough for me to maintain a comfortable lifestyle, what positives and negatives will it mean to me"

[d000hg]

Gosh this thread got long, I've been away over the holidays and just came back to check - thanks everyone.

I don't see why accepting a role with the same company would implicate my current contract as inside IR35. My current contract is to do work on one specific project and they have already said that the role would differ from that quite substantially because they don't want/allow me as a contractor to be a critical part of things, knowing I can just leave tomorrow if I want. There are also differences in terms of working practices (I use my own equipment currently, WFH rules, etc).

I still haven't done the money calculations properly. It's hard to see an outcome I am not worse off (if I were inside IR35 not the case) but in one sense, this is something that's good for them rather than me - clearly they want my skills. OTOH if I want to keep contracting with them for year after year it does become harder to justify.

There is the issue that as a contractor one tends to remain at the same level / doing the same thing because people want you based on what you've proven you can do before. So there's the angle that even without explicit 'training', employment is a way to progress to more senior things (basically an architect or technical lead rather than developer/designer). Although coding is a thing I actually quite enjoy doing.

I do possess "a specific set of skills" ( ) which are particularly valuable to this client based on work I've done in the past on very, very niche technology. There's the argument that means I can command a higher salary but equally, the long-term plan is phase that stuff out so one might argue that's a great position for a contractor to charge a high rate and then leave when it's done.

No easy answers really. I'm currently minded to push back "happy as it is" or "make me an offer". Although I don't know I agree 100% on "they should make the first offer" rather than taking control and being blunt "I want X".

[jamesbrown]

a lot of banks furloughed their inside IR35 contractors without pay from mid December until now (or even January 8th).

It would be a neutral to weak pointer if the permies were also out and not a strong pointer overall in an industry where seasonal furloughs are routine. One of the trickiest things to grapple with concerning employment status case law as it relates to IR35 status is that it is both highly context dependent (e.g., D&C is a weaker pointer for specialists, RoS is highly conditional) and all factors are considered in the round. This is why tribunals continue to produce surprises and why the legislation is, ultimately, fundamentally flawed.

[eek]

Yes they are. And one of those intricacies is that each contract is judged separately, meaning having two concurrently is not a defence... Another is that a RoS is a defence but only if it is "reasonably unfettered" and the substitute assumes the entire contractual responsibility so is not just a temporary sub-contractor.

The guy sent home is a precedent because he wasn't paid (on the basis he had no work to do or, in this case, was unable to do any work) and his permanent colleagues were. But he also had a fairly solid working arrangement with his client and could demonstrate other factors that affected the decision.

Decisions may have been made on the basis of small things, but it is the totality of the arrangement that matters, not contractual details.

also I’m not 100% sure that mutuality would work as an argument in the new IR35 world.

a lot of banks furloughed their inside IR35 contractors without pay from mid December until now (or even January 8th).

[malvolio]

Yeah, as long as you don't take the piss, I wouldn't worry about if switching from contract to perm. The insurance is really just to stop HMRC ruining your life trying to prove a case.

Then again I would never take a gig that is a disguised role - if switching from contractor to perm has you doing the same job in the same way, you were likely never outside IR35 in the first place.

And I think the difference can be really subtle. I could switch from contractor to perm on this gig and do identical work, if HMRC says your contract must have been inside, I'll say which one as I'm doing two, which is not a permie thing. Most cases I've read have been won from small things, I read one where the guy was sent home after a fire alarm went off and wasn't paid, which demonstrated he wasn't treated like the employees who were paid, and he won the case off that. A single day substitution is considered a rock solid defence by many people. I wouldn't risk something so tenuous and these days I don't think you can because companies are so paranoid I had to do a CEST type assessment for my latest role, but I think if you have some reasonable grounds then that should be enough for your insurance to kick in. Certainly the cases I've been reading have been about the intricacies.

Yes they are. And one of those intricacies is that each contract is judged separately, meaning having two concurrently is not a defence... Another is that a RoS is a defence but only if it is "reasonably unfettered" and the substitute assumes the entire contractual responsibility so is not just a temporary sub-contractor.

The guy sent home is a precedent because he wasn't paid (on the basis he had no work to do or, in this case, was unable to do any work) and his permanent colleagues were. But he also had a fairly solid working arrangement with his client and could demonstrate other factors that affected the decision.

Decisions may have been made on the basis of small things, but it is the totality of the arrangement that matters, not contractual details.

[oliverson]

Am I the only person that pays 300 quid odd for IR35 cover from qdos and then basically doesn't give IR35 a second thought?

I'd have no issue switching from contract to perm even on the same project, first thing I'd do is a big sigh of relief then I'd start a pension and start enjoying sick days and other benefits, I'd join all their silly webinars on woke diversity and my productivity would probably halve.

No, that's me too!

[FIERCE TANK BATTLE]

Probably, given that their cover has a "reasonable prospect of success" clause, which you would not have in that scenario, typically (obviously depends on the facts). Assuming Chapter 8 here, which has a more direct risk to the contractor's Ltd, although Chapter 10 has some risk too, depending on contractual terms.

Yeah, as long as you don't take the piss, I wouldn't worry about if switching from contract to perm. The insurance is really just to stop HMRC ruining your life trying to prove a case.

Then again I would never take a gig that is a disguised role - if switching from contractor to perm has you doing the same job in the same way, you were likely never outside IR35 in the first place.

And I think the difference can be really subtle. I could switch from contractor to perm on this gig and do identical work, if HMRC says your contract must have been inside, I'll say which one as I'm doing two, which is not a permie thing. Most cases I've read have been won from small things, I read one where the guy was sent home after a fire alarm went off and wasn't paid, which demonstrated he wasn't treated like the employees who were paid, and he won the case off that. A single day substitution is considered a rock solid defence by many people. I wouldn't risk something so tenuous and these days I don't think you can because companies are so paranoid I had to do a CEST type assessment for my latest role, but I think if you have some reasonable grounds then that should be enough for your insurance to kick in. Certainly the cases I've been reading have been about the intricacies.